The possibility of the ANFA and SMP returns (€ 1.2 billion a year) being directed towards the reduction of primary surplus targets remains open. It is the Greek government that has requested that the profits be exploited (ANFA’s and SMP’s) in a financially neutral manner. However, it seems that institutions think different, with their aim being the gains from the Greek bonds to be used to broaden the fiscal space. In such a case, the Eurogroup could also accept the allocation of fiscal space to Greece for tax relief, and at the same time for some states, such as Germany, to not be forced to resort to their Parliaments. This would mean that the primary surplus target would remain at 3.5% of GDP for both 2021 and 2022, but this year the budget space would be increased.
That is why Finance Minister Christos Staikouras has split the negotiation process on behalf of the Greek side in separate parts. Firstly, the agenda includes: the change in the use of profits by ANFAs-SMPs for public investment; the surplus “bridge” (transfer of additional space for next year) and the exclusion of refugee management costs of 200 million euro by measuring the primary result, according to the program. Therefore, the issue of reducing targets for primary surpluses in 2021 and 2022 is not expected to be addressed before the autumn of 2020. However, in case the ANFA-SMP returns are directed towards reducing surpluses (even this year), this could plausibly give the institutions arguments for a smaller absolute reduction in goals, and thus less room for tax-relief measures. Competent sources point to increased chances of definitive decisions to change the use of profits by ANFAs and SMP’s and a disbursement of the first € 650m in July.
Towards the end of the year
By February 20 the institutions are expected to respond on a technocratic level to the Finance Ministry’s proposal on changing the use of Greek bond profits. In any case, the Commission’s final proposal to the Eurogroup on bond profits is expected to endorse the prevailing views among eurozone finance ministers, which are that profits should be proven to help the Greek economy grow.
Apart from that, the debate on Greece’s request for lower surpluses will start towards the end of the year, which means that the debate will kick off after the draft budget is tabled, that is, in October, but it is worth noting that it remains unknown when the process will be completed. If one thing is for sure, it is that any delay does not favor the Greek side, which could be facing German resistance. /ibna